Blockchain is one of the most exciting and well-hyped technologies in the world today. Almost everyone has heard of it, yet almost no-one fully understands it. Over the coming year, the technology will face existential challenges in terms of regulation, funding, and long-term viability in the face of competition from other technologies like AI.
If blockchain can overcome the scrutiny, cynicism, and outright hostility posed to it by older, more established technology, it could dominate the next decade.
Blockchain is synonymous with cryptocurrency, which has actually done more to harm its reputation over the last year than anything else. With various cryptocurrencies going bust, their founders being arrested for fraud, and prices plummeting, cryptocurrency has gone from a sure thing to a bitter disappointment, and is an embarrassment that will likely be tied to Blockchain for years.
To combat this, businesses using the technology will almost certainly try to distance themselves from cryptocurrency by focusing on the other uses blockchain has, namely security and accountability. It can be used to solve very real problems that are plaguing businesses, but it must do so in sustainable and understandable ways.
Currently, blockchain has a massive environmental cost due to the huge amounts of power it needs. The complex algorithms that make the technology possible are running constantly, meaning it uses massive amounts of energy.
Taking the most famous blockchain network as an example: Bitcoin uses so much computing power to keep the network running, that all that power combined is as much energy as was used by 159 different countries around the world. This is the equivalent of about 0.6% of the total energy use of the entire world.
Many critics of the technology point out that this is, of course, entirely unsustainable. As the technologies becomes more refined, it must address the problems around it in terms of trust, cost, and vulnerability.
Few technologies have been accompanied with as much fanfare as blockchain. Blockchain was heralded as a revolution in security, billed as something that would change how information was sent, organised, and handled. All of this is possible, and we’ve seen it being used for exactly these purposes.
However, no fortress is impregnable, and like any system, blockchain does have weaknesses. There is one major security flaw in blockchain: if more than half of the computers working as nodes in the network tell a lie, the lie will become the truth. This is called a ‘51% attack’, and is a major issue facing the technology, and the wider community that claim the system will allow for greater security.
Some are advocating a system of validation, but this goes against the fundamental concept of blockchain as a source of untampered data.
According to a Global Blockchain Survey conducted by Deloitte in 2018, 40% of respondents reported that their organization will invest $5 million or more in blockchain technology in 2019.
This is good from the perspective of legitimising the technology as a viable business tool, but what about governmental support?
Blockchain predicates itself on the idea of complete transparency. If a chain is public, all transactions and records are available for everyone on that chain to look at. Understandably, this poses problems for legislation and online privacy laws, which differ from country to country. If nodes in a chain are in different countries, how will laws apply to the information within the chain?
It’s clear that are still many hurdles for blockchain to clear before it will be seen as an entirely legitimate and safe tool. Any one of these issues could stall its development, or bring it crashing down completely. Only time will tell if blockchain will manage to survive 2019, or if it will be written off as yet another fad that couldn’t deliver.
Learn more about upcoming engineering developments, or read about predictions for the engineering sector.
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